Efficient Intra-Household Allocation of Parental Leave

We propose a model of how parents resolve conflicts about sharing the negative short and long-term consequences from parenthood-related career interruptions on earnings. We introduce childcare sharing in a collective model of household behavior with public consumption as in Blundell, Chiappori, and Meghier (2005). Conceptually, the solution to the household problem can be thought of as a two-stage process: Parents first agree on public expenditures on professional childcare; then, conditional on the level of public consumption and the budget constraint stemming from stage one, parents determine their individual job absence durations and private consumption shares. Using relative income measures from German parental benefit data as distribution factors, we find evidence for Pareto efficiency in childcare sharing. More precisely, households with higher total incomes purchase more professional childcare, and changes in distribution factors shift the conditional parental leave allocation in favor of the partner whose relative income increased.childcare, collective model, conditional sharing rule, intra-household allocation

Is Capital Mobility Good for Public Good Provision?

We set up a general model on capital mobility which contains many of the models in the literature as special cases. The race to the bottom results not from a capital flight effect, but rather from a kind of Laffer curve effect in public good provision. Selectively introducing simplifying assumptions allows reproducing other models and understanding how they bias results in favor or against capital mobility. We then show how the net effect of capital mobility can be positive or negative within the same model depending on the relative capital endowment

Efficient intra-household allocation of parental leave

We propose a model of how parents resolve conflicts about sharing the negative short and long-term consequences from parenthood-related career interruptions on earnings. We introduce childcare sharing in a collective model of household behavior with public consumption as in Blundell, Chiappori, and Meghier (2005). Conceptually, the solution to the household problem can be thought of as a two-stage process: Parents first agree on public expenditures on professional childcare; then, conditional on the level of public consumption and the budget constraint stemming from stage one, parents determine their individual job absence durations and private consumption shares. Using relative income measures from German parental benefit data as distribution factors, we find evidence for Pareto efficiency in childcare sharing. More precisely, households with higher total incomes purchase more professional childcare, and changes in distribution factors shift the conditional parental leave allocation in favor of the partner whose relative income increased

Low-Carbon Development through International Specialization

A major concern in climate negotiations is that decarbonization may signi cantly hurt the development process. This paper shows that international specialization can contribute to making environmental and economic objectives compatible. When carbon effi ciency di ffers between two trading partners, environmental policy a ffects production cost di fferentially, so that the comparative advantage in technology is endogenous. Under a global climate agreement, a universal carbon tax would shift the production of energy intensive goods towards carbon effi cient economies. Once emissions are correctly internalized, trade becomes unambiguously bene cial for the environment and allows pursuing both environmental objectives and fast economic growth. Even in the absence of a climate agreement, free trade provides the option of indirectly accessing carbon e fficient technology abroad. This improves the marginal rate of substitution between consumption and environmental quality and thus achieves emission reductions even without international cooperation

The Globalization Paradox Revisited

According to the Globalization Paradox, globalization limits the freedom of choice for national governments. Capital mobility in particular induces tax competition, thus putting downward pressure on capital taxes. However, while capital mobility introduces the inefficiency of tax competition, it makes the allocation of capital more efficient. Whether national welfare and tax-financed public good provision increase or decrease through capital mobility depends on country characteristics. These characteristics include the relative capital endowment, the availability of taxes on fixed factors such as land and the preference for the public good. We compare the two second best settings of a closed economy and an economy with capital mobility to show that the relative capital endowment determines whether the net effect of capital mobility is positive. Fixed factor taxes have the potential to improve welfare by defusing the globalization trilemma through a reduction in the need for capital taxation

Agricultural Risk Management and Land Tenure

Farmers under a sharecropping contract have been shown to exert less effort than farmers renting land due to lower incentives. They do not only choose their effort level, however, but also make investment decisions between projects of different risk-return profiles. We develop a small theoretical model that integrates the effort effect of sharecropping as well as the risk-reducing aspect of sharecropping which allows analyzing the implications for production, risk-management and risk-coping. In the empirical analysis, we combine a household survey taken in eleven African countries with data on climate risk to test the theoretical predictions. We find that sharecropping is endogenous to climate: it is more frequent in regions with low rainfall and higher weather variability. In a second step we test whether sharecropping can function as a substitute to other risk adaptation strategies. We find that sharecropping farmers are less likely to own livestock and more likely to use fertilizer. In economies where formal kinds of insurance are unavailable, sharecropping thus functions as a form of insurance and reduces the need for potentially harmful risk management strategies

the double dividend of redistribution

Empirical evidence shows that low-income households spend a high share of their income on pollution-intensive goods. This fuels the concern that an environmental tax reform could be regressive. We employ a framework which accounts for the distributional effect of environmental taxes and the recycling of the revenues on both households and firms to quantify changes in the optimal tax structure and the equity impacts of an environmental tax reform. We characterize when an optimal environmental tax reform does not increase inequality, even if the tax system before the reform is optimal from a non-environmental point of view. If the tax system before the reform is calibrated to stylized data—and is thus non-optimal—we find that there is a large scope for inequality reduction, even if the government is restricted in its recycling options

Essays on Parental Leave, Global Disinflation and Non-Renewable Resources

This thesis consists of three independent chapters. In chapter 1 the focus is on the allocation of parental leave between spouses. We modify a model of collective rationality developed by Pierre-André Chiappori and coauthors to explicitly account for parental leave. The model predicts that the ability of spouses to influence the allocation of parental leave depends on personal characteristics such as age and income. Using representative data of households with young children from Germany we show that a high relative age or income allows a spouse to reduce his or her share in childcare. In chapter 2 the influence of increasing international trade on inflation is analyzed. Increasing international trade makes firm competition fiercer and leads to improving productivity through firm selection. All else being equal, this reduces inflation. In chapter 3, geological evidence is linked to the historic developments of non-renewable resource prices and its production in a model of endogenous growth to suggest that a range of non-renewable resources could be considered inexhaustible. If the deterioration of resource deposits in terms of ore grade and investments into extraction technology offset each other, the total resource extraction cost per unit of the resource would stay constant. This could explain the historic pattern of exponentially growing resource consumption at constant prices

The non-monetary side of the global disinflation

The dramatic decline in inflation across the world over the last 20 years has been largely credited to improved monetary policy. The universal nature of the phenomenon and its simultaneity with globalization however indicate that there might also be a "real" side to it. We build a model based on Melitz (2003) in which falling transport cost lead to greater openness, higher productivity and lower inflation. Following a decline in transport cost openness increases and firm selection eliminates the least productive domestic firms. The consequent increase in average productivity leads to falling relative prices for goods. A cash-in-advance constraint allows to analyse how falling relative prices can lead to lower inflation. Using a dataset of macroeconomic variables for 107 countries from all world regions we are able to show that openness-induced productivity growth leads to a significant decline in inflation world wide.La très forte baisse de l'inflation à travers le monde au cours des 20 dernières années est largement considérée comme liée à l'efficacité de la politique monétaire. Cependant, sa dimension universelle et sa coïncidence avec la mondialisation suggère qu'il existe également des causes " réelles " à ce phénomène. Nous construisons un modèle (fondé sur Melitz (2003)) dans lequel une plus grande ouverture au commerce international induit une plus grande productivité et une inflation plus faible. Suite à une baisse des coûts de transport, les échanges commerciaux augmentent et la concurrence entre les entreprises élimine celles qui sont moins performantes. Ceci induit une hausse de la productivité moyenne et donc une baisse des prix relatifs. En raison de l'existence de contraintes de trésorerie, nous pouvons analyser la façon dont une baisse des prix relatifs induit une baisse de l'inflation. En testant le modèle sur 107 pays, nous montrons comment la hausse de la productivité induite par la mondialisation réduit l'inflation

Fiscal Instruments for Sustainable Development: The Case of Land Taxes

Economists argue that land rent taxation is an ideal form of taxation as it causes no deadweight losses and has therefore no adverse effects on growth. Nevertheless, pure land rent taxation is rarely applied and, if so, revenues collected remain rather small. Property taxes share some of the characteristics of land taxes and generate small revenues, inter alia also in developing countries. This report revisits the case of land taxation for developing countries that are often characterized by large informal sectors, low public spending and poor tax or land administration institutions. We first provide a comprehensive overview of direct and indirect welfare and development effects of land rent taxation, ranging from increased efficiency in the fiscal system and in financing infrastructure, over environmental effects due to changes in land use to distributional effects. Barriers and constraints of implementing land taxes are also discussed, particularly the existence of a land registry, the role of administrative costs, compliance, evasion and political economy aspects. We extend this review with an in-depth analysis of current land tax systems and reform options in six case study countries. For four countries, we provide an additional quantitative analysis based on micro-simulations with household data that allow us to quantify revenues and distributional effects of various land tax regimes. Our main finding is that land taxes provide a large and untapped potential for financing governments. Formalizing and securing land tenure by establishing a land registry is a pre-condition that further provides substantial co-benefits for various sustainable development objectives. Widespread concerns regarding the feasibility and costs of implementing land taxes are rarely valid, as land taxes are in these aspects comparable to other taxes. Political will and investment in the quality of administration are, however, decisive. Considering some key principles in designing the land tax can help reduce administrative costs, avoid adverse distributional effects and increase compliance